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Why Are More Cancer Patients Being Treated in Hospitals Versus Clinics?

IP Blog | Dave Melin | August 8, 2013

hospital signSince major changes in Medicare’s cancer care reimbursement policies in 2005, there has been a growing number of cancer patients heading to hospital treatment. A recent study shows that the “share of outpatient chemotherapy administered in hospitals increased by more than 150% since 2005”.

What is causing this exodus to hospitals?

The basic reason is that due to changes in policy, hospitals simply have more advantages than small clinics.

For example, hospitals have a competitive advantage over oncology clinics due to their ability to purchase drugs, biologics, and other services at dramatically lower prices than the clinics. Hospitals have access to buy drugs from manufacturers at deep discounts, known as 340B pricing or Disproportionate Share Pricing. In theory, hospitals who care for at least 15% of the patient population defined as indigent would qualify for 340B pricing. Prior to the passage of the Affordable Care Act (ACA), also known as ObamaCare, around 14% of hospitals had access to 340B; in post-ACA 2009, that number had increased to over 41%.

As a result of this and other economic advantages for hospitals, many community oncology clinics are finding it hard to stay in the black. A number of them are being purchased by large academic centers and hospital centers. In a recent example of this trend, Georgia Cancer Specialists was acquired by Northside Hospital in Atlanta, GA. (Georgia Cancer Specialists is one of the largest and most prominent centers for community oncology excellence in the U.S.)

Why does this matter?

The challenge with increased migration to hospital oncology care is that caring for cancer patients in a hospital setting is more expensive for the health care system, sometimes reaching as much as 50-75% more than clinic costs.

This and other trends mean that patients with cancer may be treated at different sites of care than in the past. From a patient perspective, this may mean new access barriers to drugs, products and services, such as greater patient responsibility or cost-sharing for their care and treatment. Manufacturers need to understand the evolving landscape in the U.S. and take important steps to tailor patient assistance programs (PAP), pricing, and medical education to meet the changing needs of oncology providers and patients.

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